“We’ve Seen this Before” – in 1999, then Stocks Crashed

“A lot of deterioration and decay under the hood”

The fourth quarter is normally a very strong quarter, and December exceptionaly strong in the global markets, says Christine Hughes, Chief Investment Strategist at OtterWood Capital. This quarter too, global markets are in the green after a powerful rally in October.

But for the year, the S&P 500 has been stagnating. Wthout the top 10 mega-cap stocks (which are up 14%), the index is actually down 6%. This spread between the top ten names and the rest of the index now amounts to 20%.

“We’ve seen this before,” Hughes says. Last time a spread of this magnitude occurred was in 1999. At that time, the rest of the market was strong. And it ended in a three-year crash. This time, the rest of the market is already weak. Then there’s Glencore, whose collapse would ricochet around the global credit markets and hit stock markets. So here’s Christine Hughes, charts and all:

56 comments for ““We’ve Seen this Before” – in 1999, then Stocks Crashed”

A person gave one of my books three stars because it informed them of things they didn’t want to know and of things they were trying to forget. Jimmy Buffett summed up the reason there is one bubble after another, “Is it ignorance or apathy? Hey, I don’t know and I don’t care.” Like Glencore follows Enron, XYZ Inc. will follow Glencore. Capitalism works just fine so long as socialism is there to bail it out every few years.

d

Nov 29, 2015 at 4:42 am

Socialisjm has never bailed out capitalism.

Cant and never will. As it get sits money from successful capitalists, when they need bailing out, it is because they have no more money for Socialist to steal, to bail them out with.

There is no such thing as a free lunch in the real world .

Socialist say there are free lunches, for ever for everybody, who votes socialist.

Just like greece. Which has no right, just left, very left, and extremely left. hence the mess they are in.

Nick

Nov 29, 2015 at 5:04 am

That is one perspective. On the other hand, the Greeks endure, they aren’t starving on the streets, or looting the cities. Austerity is not a solution, just as crony capitalism doesn’t bring wealth to all.

d

Nov 29, 2015 at 5:38 am

“On the other hand, the Greeks endure, they aren’t starving on the streets, or looting the cities”

You forgot, most Greeks with any money, do not keep it in Greece, or within reach of the Greek soclist governments..

Nick Kelly

Nov 29, 2015 at 11:49 am

During one of the many illegal general strikes called by the Greek left during the never ending debt crisis one bank that stayed open was set on fire. Several female employees, one pregnant, who made it to the roof were burned alive as the mob jeered. Police watched.
Greece had a post WWII left- right ‘Civil War’. It was re-named this by unanimous consent of the Greek parliament. Its previous designation was the ‘Communist Insurgency’.

Robert

Nov 29, 2015 at 10:20 pm

If they were starving in the street you would never hear about it in the MSM. And Confucius was telling the truth when he said “Out of debt, out of danger.” If living within your means means austerity, so much the better.

Keith

Nov 29, 2015 at 6:04 am

We must stop bailing out banks, the crisis has passed.

Shut the bankrupt banks down in an orderly fashion and open new ones.

It’s the creative destruction of Capitalism, bankers must be weaned off their nanny state, socialist ways.

d

Nov 29, 2015 at 3:38 pm

“We must stop bailing out banks, the crisis has passed.

Shut the bankrupt banks down in an orderly fashion and open new ones.”

The crisis has not completely passed, however state bailouts of banks are no loner necessary, too many banks were bailed out after “imprudent activity’s”, as contagion/(domino effect of failures), had to be prevented.

“It’s the creative destruction of Capitalism, bankers must be weaned off their nanny state, socialist ways.”

Bailing out the banks was not socialist activity, it was simply preservation of and ill regulated (particularly in the US ) interlocked global financial system.

Allowing the system to suffer a massive failure would have been criminal, supporting the system in the way it has been done in the US after QE 1, is to say the least imprudent.
‘
In 1929 to little was done, to late, a review of the actions of fed actions in response to the 08 issues, may produce more prudent methods in the future.

However the basic problems will remain as long as banks are allowed to act as trading houses, with savers funds.

Old money flows down the generations and is more to do with crime than successful Capitalism.

Here in the UK.

Most of the land in this country is still owned by the descendents of feudal war lords that killed people and stole their land and wealth.

Most old money fortunes were acquired through crimes against humanity like slavery, colonialism or exploiting the people of their own country in appalling conditions in the factories of the 19th Century.

Many old money fortunes in the US have a criminal past too.

d

Nov 29, 2015 at 4:09 pm

not untrue however, you forgot to continue, the difference between today’s “taxing state” and yesterdays “robber Barron” is that the state uses, the police, the IRS/revenuers, and the courts, instead of a group of bully’s, to extort from you.

This is the problem in countries like greece Portugal and Spain, Etc the state becomes the biggest employer. and the sate employees then enslave the rest of the country for their personal gain.

Slavery never left the west, the chains today are simply credit and taxation.

That is why they make it impossible for the average person to ever save the purchase price of a house and why they tax land and have the “Wright” to take it if you dont pay the tax.

Which is why all the land I own, is owned by corporates, who can deduct all the land taxes, against other income.

Nick (2)

Nov 29, 2015 at 10:09 am

How can you say there’s no such thing as a free lunch? I had one at work just the other day, when my co-worker bought be lunch. If I wanted, I could go down to the food bank and get a free lunch with no questions asked. When I visit my in-laws, they feed me. This is the weirdest proverb that people quote as an article of faith — the world’s full of free lunches.

d

Nov 29, 2015 at 3:50 pm

YOU dint pay for those lunches.

Somebody, somewhere, paid for those lunches.

Therefore they were only “free” to you.

They were in fact not free.

Nick (2)

Nov 29, 2015 at 5:28 pm

Well, yeah — that’s what ‘free’ means. If you are taking it mean some sort of philosophical point that everything has a source in the world, then it’s not a very good way of expressing it. Take, for instance, the common expression “You win a free car!”, which normally doesn’t create confusion, because everyone understands it means the car IS FREE TO THE GUY GETTING IT.

interesting

Nov 29, 2015 at 9:23 pm

back to Greece are we….well had the pro capitalist and bailout king the vampire squid not cooked the books Greece would have never gotten in the EU…..and i’ll bet that is the fault of the Greece far left as well.

i’m getting sick and tired of this socialism capitalism right vs left bullshit.

there’s a big club and you and i ain’t in it and the players of that game keep us arguing while they loot the country treasury while we’re all too busy pointing fingers and calling people liberal conservative or socialists or capitalists…….it’s fucking nuts.

all i know is every year i have to do more with less and there is no future, there’s nothing but this endless argument over the scraps the “players” let fall off the table.

d

Nov 29, 2015 at 9:39 pm

“back to Greece are we….well had the pro capitalist and bailout king the vampire squid not cooked the books Greece would have never gotten in the EU…..and i’ll bet that is the fault of the Greece far left as well.”

Get it wright, the greek left (There is no greek right) paid some GS employees (Who no longer work for GS) handsomely, in cash, to cook the books for them, and then knowing presented the cooked books to the EU.

Blaming GS, is more rich man bad BS, the crap you complain about.

If GS was guilty, the EU would have prosecuted them long ago, as the EU still seek a non Euro scape goat, for the Socialist Greek Fiasco.

CrazyCooter

Nov 29, 2015 at 11:18 am

I posted this on WS a while back. Maybe you missed it. The context was similar.

I don’t know whether socialism or capitalism works or if what they call capitalism even exists anymore. what I do know is that both will work just fine as long as the money is being created out of thin air and is accepted as legitimate.

Whoz

Nov 29, 2015 at 4:00 am

“Crony Capitalism and central bank price rigging works just fine so long as socialism is there to bail it out every few years.

Keith

Nov 29, 2015 at 4:55 am

Global trade in real products is going downhill fast as can be seen from the Baltic Dry Index (the cost of shipping containers around the world).

“As Of Today, The Baltic Dry Freight Index Has Never Been Lower” ZeroHedge

Our leaders are fiddling while Rome burns.

This time “Rome” is the global economy and all the nations within it.

It became obvious in 2008, that current thinking was totally wrong and the bankers, economists and main stream commentators have no idea what they are doing.

We were re-assured by their complex mathematical models that ensured the global economy was being run successfully.

2008 was of such magnitude (nearly bringing down the Western financial system) it showed the lack of understanding lay in the very assumptions that we have built these layers of complexity on top of.

Drilling down, I and many others, have found we don’t actually understand the very nature of money and how it can be created and destroyed on bank balance sheets.

This was known in the 1930s and has been forgotten.

The most basic and important fact in any financial system, the nature of the money used, is no longer understood.

Modern economists treat banks as intermediaries where money flows from one party to another, in doing this they have left themselves blind to events like 2008, where wholesale money destruction takes place on bank balance sheets.

Once you have come to this conclusion you can drill down else where to find the same complexity built on bad assumptions.

Today’s trickledown, supply side economics – Michael Hudson in “Killing the Host” calls it “junk” economics and I agree.

We have forgotten the distinction between earned and unearned wealth that was well understood by classical economists including Adam Smith.

We are now blind to the dangers of a parasitic financial, rentier economy bleeding the life out of the real economy.

We are fiddling while Rome burns, thinking in ways that are based on very bad assumptions and taking no notice when the warning signs flash red.

1998 – Long Term Capital Management collapses, a very small firm specialising in certain types of derivatives nearly takes down the US financial system. It was ignored and the decision to not regulate derivatives was made in 1999.

1999/2000 – The dot.com bubble bust showing modern financial markets are no more sophisticated than the Tulip Markets of 1600s Holland. It was ignored and we carried on placing our faith in markets.

2008 – Financial Armageddon – Never mind no need to change too much, just carry on as before.

China is sick, but they also have huge cash reserves… They will run this out as long as possible. If you want growth, come to Africa.

d

Nov 29, 2015 at 5:43 am

Africa is making the same mistake everybody else has, it is basing its economic development on “Exports”.

Also it is another place whet the rules and confiscations frequently shift against you, without warning, overnight, particularly if you are white, or a white entity..

Binkius

Nov 29, 2015 at 6:08 am

Baltic Dry Index does not measure container cargo. It measures dry bulk goods – ie. commodities. It does not measure “finished” goods or what you call “real products”.

Also, you must take into account whether the drop is due to over supply of ships or decrease in demand (or more likely, some combination of the two). Do some regression tests and you’ll get an answer.

The proxy “index” you are looking for is the Shanghai Container Spot Price. That measures container shipments across the Pacific. Even better, compare east-bound vs. west-bound spot prices as this is an easy way to get an idea if the problem is too many ships or too little demand. No regression testing necessary.

Keith

Nov 30, 2015 at 2:29 am

Making comments is a good way to correct your thinking and the example used here is not 100% accurate.

The BDI is what you say, and is often used as a forward indicator.

I did some further reading when you pointed out the mistake and it is a very volatile index.

ZeroHedge has been predicting financial catastrophe for years and always jumps on any negative figures and blows them up.

Not that ZeroHedge is wrong, but the timing of the catastrophe is very hard to predict as all rationality has been lost along time ago on the journey into the latest new paradigm …… Central bank money printing will save the world ….. I think not.

hidflect

Nov 29, 2015 at 11:50 am

Agreed. I see deflation as the giant killer. I’m selling out of my gold mining stocks even though they’re excellent companies with good returns. Even gold will suffer, probably falling to $800. There’s no new money coming into the global economy. Just batten down the hatches and hold cash.

CrazyCooter

Nov 29, 2015 at 11:58 am

Hugh Hendry had a great comment on miners, which basically went along the lines of “if the price of gold goes to the moon, the asset (i.e. deposits) will be confiscated as most miners are not in countries with deep/strong common law style legal systems” so there no real upside in the event of a system wide reset/systemic meltdown.

Gold and cash are good though!

Regards,

Cooter

Toddy

Nov 30, 2015 at 1:57 pm

Can you elaborate? As long as CB’s across the world keep doing QE, I don’t see how anyone would be short gold and long cash. It’s intensely inflationary.

Saylor

Nov 29, 2015 at 12:21 pm

The BDI is not about container shipments.

It is about bulk ship like coal and grains.

interesting

Nov 29, 2015 at 9:31 pm

“Long Term Capital Management collapses”

and lets not forget that company was ran by “experts” that won a nobel prize…..let that sink for a minute.

MC

Nov 29, 2015 at 6:24 am

This “narrowing” is an extremely interesting phenomenon.
It seems to somehow be related to revenue expectations, not profits: the companies at the center of this narrowing, chiefly the so called FANG (Facebook, Amazon, Netflix and Google/Alphabet) are known for basing their business model more on ever increasing revenues than on pure profits. Proof of this is AAPL: it always reports massive profits (and 2015 won’t be different) but it’s far from its five year peak back in July. It rebounded somehow after it hit the 2015 bottom in August but it didn’t follow the FANG phenomenal growth in the same time frame.

Sure Apple hit two snags this year (the iWatch didn’t turn out to be the next hot thing and the iPhone phablet is eating into iPad sales) but these are hardly showstoppers considering Apple’s insanely high margins. Something else must be up.

Another proof that something’s up is XOM. Its revenues are being bloodied by the slump in oil and natural gas but it hasn’t gone under $70 since, brace for this, September 2011. This year it never reached the $68/69 “floor” many predicted for 2015 and has been sitting comfortably over $80 since early October in face of continuous carnage in oil and natural gas markets.

So, stock prices have become disconnected from fundamentals unless something truly catastrophic happens: see Abengoa (BME:ABG), which turned into a penny stock in late 2012 and has slowly declined all the way to under €0.5. The perfect target for vulture funds, if it cannot get a taxpayer-subsidized bailout.
But we already knew that: financial markets these days shrug off any bit of bad news or somehow manage to turn them into “good news” on the premise that if things get really bad, a bailout or more “quantitative easing” is just around the corner. Hank Paulson and Ben Bernanke changed everything back in 2008 when they started running around with their hair on fire.

The problem however is that now something has broken in this “perfect system”. Caution hasn’t set in yet, as proven by those still hoping oil will rebound to over $80/bbl be June 2016 (it may yet happen… but only if something completely unpredictable happens in Saudi Arabia or Russia), but there’s what can only be described as a general sense of uneasiness in the air.

Tone

Nov 29, 2015 at 10:19 am

Baby Boomers have all the money, and the ones that don’t are still working…their spending days are over…they spend their money on basic needs and health care…much of Government money goes towards this group…even for the ones that don’t need it…entitlements.

I am not trying to blame anyone for wanting to live longer, as I believe that we are all on the same page on this, but the fact is that we are all living longer, and when the largest group has the greatest influence on Government policy, they control the economy.

In 1999 Baby Boomers were still spending, so growth was still there. The access to easy money has prolonged the life of the Stock Markets to this point…this is 2015 and I do not see growth…what happens next is inevitable.

Cheers

John

Nov 29, 2015 at 10:39 am

Boomers are still working, because, unless they had a government job, their pensions were taken and ZIRP makes what savings they have unproductive. Others collect Social Security because decades ago, they were not able to opt out and invest the money themselves. Which is why comparing Social Security to Ponzi schemes is a specious argument. No one is forced to join a Ponzi scheme and the scheme always collapses as soon as it is revealed that it exists only to transfer current contributions to previous contributors.

But I agree. The boomers were a continuing growth factor due to their profligate spending. But that is over.

polecat

Nov 29, 2015 at 7:37 pm

I’m a boomer, but somewhat of an outlier….didn’t buy into ungodly conspicuous consumption like so many others…. as of 08’saw where things were headed…planted home garden, fruit trees ,raising some chickens & honey bees…..lowly american version of russian kitchen garden…….no pension….no investments….no sick care..house paid. just hunkering down while riding this rollercoaster intact….if that is at all possible!!!

CrazyCooter

Nov 29, 2015 at 11:45 am

I sent this cartoon to my old man (we laughed about it the next time we talked):

There are still no free lunches out there. If our “country” can’t manage it’s collective affairs so that each new generation can successfully move into the workplace, society will bifurcate over time. We are simply on a fast train to poverty for most Americans. And, I could argue that in a global market place, that is kind of inevitable as other standards of living rise as our fall (or at least stall out), but not to an extreme.

The demographics just make it worse.

But no part of this equation is static, so what the younger folks (with means and/or ability) do in response is what is likely most interesting. If they eschew debt (e.g. buying a house, new car, credit cards), eschew consumerism (i.e. keep only essential possessions they need for living/quality of life), and stay mobile (i.e. able to pack and go to a better opportunity in the next town), it might look a lot like what is emerging. After all this group will have seen how many market crashes in how many years?

I actively want to *avoid* owning assets to some degree, because it will just establish a base for taxes at some point, if it doesn’t already, and limit my mobility. As demographics proceed apace to hell, taxes are going to go up, up, and up some more. Things that weren’t taxed, will be. Those that were taxed, will be taxed more.

And this will be unequal at the municipal level, so there will be lots of arbitrage opportunities for the mobile to take the same pay with lower overhead some place else.

And if you don’t believe me, this is *exactly* why Texas packed on so many jobs (broadly) while many other states lost jobs in recent years. If you simply bust out a spread sheet, they immediately sort to the top for low taxes and business friendly. This has been going on for YEARS as companies shutter operations in a high tax states (e.g. Illinois, California, etc) and move to Texas. After 07/08, this exacerbated job loss in states that were net losers of corp head quarters and such.

My point being, that Texas has been taking in a lot of folks from other states as well, but those folks had to be able to pack and move – for precisely the reasons I stated.

Regards,

Cooter

Paulo

Nov 29, 2015 at 10:21 am

Ahh, there is always the bogeyman “Socialism” to rally the troops. For d….socialism is not having a free lunch, it is simply a group of policies that more equitably shares the wealth of a country by accepting that there are many people who, by no fault of their own….perhaps simply being born on the wrong side of the tracks or in the wrong family, (perhaps to a family whose parent developed cancer like my dad at age 43…when I was 7), that country concludes that maybe the care of the individual and not simply throwing the family into the street is more important and beneficial to everyone than ‘winner take all’, especially for the lucky and well connected.

And the old joke/aphorism exists for a reason: “privatize the profits, socialize the losses”; witness TARP, ZIRP, whatever.

The example best used to describe this is a comparrison of two health systems. Even before Obamacare, (which merely exacerbated the problem), the US system is based on crony capitalism after Reagan allowed health co-ops and institutions to change into ‘for profit’ corporations, usually run by CEO/doctors. On the other hand, the Canadian system is usually called socialized medicine, and is the ‘dreaded single payer system’ bandied about by the current crop of right wingers.

Here is some data from a recent study with link provided: (I’ve kept it short)

“Relevance:

Highly relevant to the debate on quality of care in private for-profit versus private not-for-profit hospitals. Suggests that health outcomes are better in Canada versus the U.S. but differences are not consistent. Demonstrates that Canada’s single payer system, which relies on not-for-profit delivery and mostly public financing, achieves health outcomes that are at least equal to those in the US, at two-thirds the cost.

Now d, I am sure you can come up with a similar article extolling the virtues of the Private system written by US doctors, (who probably benefit mightily by privatization). I just want to emphasize that the Canadian system does so at 2/3 of the cost!!!

In my own case: My wife is type one Diabetic and has been so for almost 50 years. She is very fit and in excellent health. In the US she would have never been able to obtain insurance coverage and would have certainly dieb by now. Her only sin was to have contacted a virus at age 10 which went on to trigger her immune response that subsequently destryed her pancreatic islet cells which produce insulin. This used to be called the wasting disease as young people whitered away. Her not having lived would, indeed, have been a tremendous loss to society.

Further to this, the inventor of insulin, a Canadian working at a ‘socialized public university’, and his team, received the nobel prive for science and promptly gave away the rights of this medicine to all….for free. The govt. merely provided him a annuity so he could continue with his research. https://en.wikipedia.org/wiki/Frederick_Banting

I submit in the Private US system the inventor would have been working for some big Pharma company, and said company would immediately raised the price of the drug to enable huge salaries be paid to administrators as well as copious dividends to investors, and would still be a cash cow laid on to the backs of the unlucky.

Speaking of luck, my niece who lives near Bellingham WA had the misfortune to discover a possible rabid bat in her home this past year. She was encouraged to have her children given the anti-rabies vaccine by local health officers. She did, at the COST of $7,000 per child….NOT covered by her Private health insurance. The paid for the shots and are now paying a lawyer to try and recover some of the outlay. If they had been bitten 25 miles northwest, across the Canadian border, the price of the immunizations would have been ZERO….nada.

I could go on, but simply because one works and lives with a more socialized system does not make them lazy, grasping, or users. We work pretty hard up here.

regards

d

Nov 29, 2015 at 3:58 pm

Socialist do not have the wright to take from “A” and and give to “B” as THEY deem fit.

Especially when a large part of “A’s” money, will stick to the socialists and their very corrupt system, on the way to “B”.

Socialist get the power to do this out of a gun, or by lying to the electorate and stealing/buying elections.

The only thing more corrupt than Socialist/Communist Systems, is the catholic church.

Nick (2)

Nov 29, 2015 at 5:39 pm

Why does the government of Sweden not have the right to tax Swedes? Or the government of Canada not have the right to tax Canadians? That’s the weirdest argument I’ve ever heard — what’s it got to do with an article on drivers in the stock market?

d

Nov 29, 2015 at 9:26 pm

Taxes for legitimate expenses, and illegitimate Socalist wealth re distribution, are two completely different things.

What has it to do with the topic

Every time there is a problem, the Socialist takers come out screaming, its rich capitalists fault, and they must give us more.

Its just like blaming the Jews for the holocaust, absolute garbage.

Keith

Nov 30, 2015 at 3:02 am

In the UK our antiquated class structure demonstrates the trickle up of Capitalism and the need to counterbalance it with progressive taxation.

In the 1960s/1970s we used high taxes on the wealthy to counter balance the trickle up of Capitalism and achieved much greater equality.

Today we have low taxes on the wealthy and Capitalism’s trickle up is widening the inequality gap.

We are cutting benefits for the disabled, poor and elderly so inequality can get wider and the idle rich can remain idle.

They have issued enough propaganda to make people think it’s those at the bottom that don’t work.

Every society since the dawn of civilization has had a Leisure Class at the top, in the UK we call them the Aristocracy and they have been doing nothing for centuries.

The UK’s aristocracy has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work.

Feudalism – exploit the masses through land ownership
Capitalism – exploit the masses through wealth (Capital)

Today this is done through the parasitic, rentier trickle up of Capitalism:

a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.

The system itself provides for the idle rich and always has done from the first civilisations right up to the 21st Century.

The rich taking from the poor is always built into the system, taxes and benefits are the counterbalance that needs to be applied externally.

Adam Smith:

“The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers.”

The Rothschild brothers of London writing to associates in New York, 1863:

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

Keith

Nov 30, 2015 at 3:58 am

Once the nobles looked on at an Absolute Monarch with the politics of envy and made him sign the Magna Carta.

We now see this as a good thing and is the basis of the US constitution.

The Magna Carta was the start, there is a long way to go.

Yes, union power did cause a lot of problems and mass immigration has caused more.

But Capitalism is design to trickle up from within, it needs an external counterbalance.

d

Nov 30, 2015 at 3:49 pm

Magna carta was not about envy.

Learn your history.

It was about asset retention. A halt to royal wars of aggression, and an end to benevolences.

At that point, the Throne had to much power, now it does not have enough to stop blair going to war in Iraq, something it should have been able to do.

Neither the Throne, or Parliament should be able to Engage in a war of aggression (Which iraq II effectively was) without a consensus between them. And a clear majority in the commons. And lord’s.

Capitalisms largest problem, is Socialist interference, unbalancing the natural cycles. As in QE 2, and 3, as well as the current Ecb Program. Along with Keynesian Socialist interference, to enable cheap credit Stimulus, which the borrower actually can not afford, and should not take on.

Only, Envious, lazy, takers, who dont want to work, falsely claim Capitalism is designed to empower, and enrich, only those at the top.

Why should wealth, pay high wages, and high taxes, 1 or the other, not both. Otherwise the system is imbalanced in your favor, as you enviously wish.

Keith

Nov 30, 2015 at 5:12 pm

People design systems in their own interest, more modern systems hide their skimming better.

“while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests”

Have a look at the Hidden Secrets of Money – Video 4 – to see how the monetary system rewards bankers at every step.

d

Nov 30, 2015 at 7:27 pm

All based on the premise that you do what the bankers want you to.

What happens if you use your head, dont run on credit, and defiantly do not put your liquidity in an institution that will take criminal risks with it and not return it to you on demand as they have lost it in a bankruptcy.

These days liquidity is safer in an insured private Vault than it is a bank. That can in Europe, legally bail their customers in when they have a risk failure. That legislation legalized wall streets “heads I win tails you loose” for European.

The problem is not Capitalism or banks, it is simply the socialist regulators, that make a mess with a million loopholes in it every time they try to force the wealth, to give more, for nothing, as Socialist say they should.

Banks dont do anything, messy draconian regulations, drawn up by Socialists, dont allow them to do.

Keith

Dec 1, 2015 at 3:38 am

You haven’t watched that video.

You will be paying the banks through taxes.

Banks charge the Government interest and you pay it.

d

Dec 1, 2015 at 4:00 am

I dont pay tax, neither do my entity’s.

As I am an exporter, my sales tax always ends as a rebate.

Petunia

Nov 29, 2015 at 7:45 pm

What they do in America to sick people is immoral. I am a republican and I support a single payer system always have.

My mother-in-law died last week. The tiny condo my in-laws owned will be sold and the proceeds turned over to medicare, which paid for the hospice care she received. After working a lifetime my in-laws were able to leave nothing to their children. This is after paying for both private insurance while working and medicare in retirement. It is not about the money, the condo split among their children would have only paid for a nice vacation. You can work your whole life, do all the right things, and be stripped of everything by illness or accident. It is an obscenity.

Keith

Nov 30, 2015 at 2:53 am

I think that is the plan.

If you have any money they want it.

The same ideas have rolled out globally (the Neo-Liberal agenda).

In the UK we still have the NHS, but any savings are stripped away with care home fees at the end of your life.

Only the very wealthy will leave anything to the next generation.

ERG

Nov 29, 2015 at 10:48 am

Real Capitalism allows for DELEVERAGING. Remember that? Maybe you can remember but it still hasn’t happened. A system that perpetually prevents it gets economic mediocrity or something worse instead of economic dynamism. That’s what happens when there are (a) central banks in place and (b) academics run the central banks. They fear all the rough and tumble of the marketplace because they never wanted anything to do with it in their personal lives – that’s usually why they become academics in the first place. And that’s all on top of the complete lack of necessity of (a). CBs only exist to cover the collective a$$ of the banks when they implement systemic stupidity; to tap into the taxpayers wallets and socialize their mistakes.

CrazyCooter

Nov 29, 2015 at 11:53 am

Hah! The whole point of CBing these days (i.e. post gold standard) is to FORCE releveraging at any cost, at any price. That is why we have ZIRP and expansion of credit has slowly moved up the food chain away from the little consumer guy to the big govvy on top. Those guys (and gals) LOVE to spend OPM (and everyone else is tapped out)!

But, they can’t expand sovereign debt forever. I am *really* curious what they can expand AFTER sovereign debt. Help me out WS … because it looks like the end of the road as soon as debt service over takes tax revenue.

Rates will go up one day … they CAN NOT hold them at zero forever … for the same reason they can’t buy every stock, every bond, every asset. They can only push things around for a while, but they can’t onboard the entire market (just the crap the banks want to dump due to risk or loss). In short, rates WILL GO UP at some point, regardless of what the Fed says or does.

Buckle up!

Regards,

Cooter

Petunia

Nov 29, 2015 at 11:25 am

I was actually out on Black Friday shopping, not for Xmas, but for stuff I really needed. The prices were good, the parking lot was almost half full at 10 a.m. This is the best I have seen it since 2008. It is the only Black Friday I have ventured out in since 2007. By the time I left, I saw a line for the cash register.

I will say that I saw people with coupons in their hands walking into stores, and coupons on their phones on the payment line. Overall, it seemed more upbeat than I have seen it in a long time. Having said this I will tell you that all the spending I did was for necessities, and I don’t expect to spend anything but the most minimal amount for Xmas.

Nick Kelly

Nov 29, 2015 at 11:54 am

I expect what in Canada we call Boxing Day ( 26) to equal BF, and I expect a slew of bankruptcy or emergency liquidations in Jan.

Gipsie

Nov 29, 2015 at 9:12 pm

So shopping for bread, pasta and milk is your kind of BF. Cool.

NotSoSure

Nov 29, 2015 at 8:31 pm

But in 1999 the Fed and the rest of the Central Banks weren’t actively supporting the stock market.

michael

Nov 29, 2015 at 9:08 pm

The stock market is not the economy and the FED will not create corporate profits. Without profits there will be layoffs and with those come a lack of confidence. Reality not smoke and mirrors.

Keith

Nov 30, 2015 at 4:21 am

Stock markets do not exist in their own right; they are supposed to represent the value of the underlying companies and the state of the economy.

Companies provide real products and services into that economy.

Companies take raw materials and make them into products.

Cheap oil = collapsing global economy

Low commidity prices = lack of demand for raw materials from which real things are made

QE and low interest rates may have kept stock markets up, but the real economy is collapsing.